Monday, June 14, 2010

What needs to be done to build an Indian electronics ecosystem!

A raging debate has been going on for long within the Indian semiconductor industry — what really needs to be done here to build a robust electronics ecosystem. Well, a highly engaging panel discussion, titled: “The electronics ecosystem: Plans and strategies for innovation and growth, organized by the India Semiconductor Association (ISA) was held today.Moderated by Rahul Arya, director, marketing and technology sales, Cadence Design Systems (I) Pvt Ltd, the panelists included:

* Lou Hutter, senior VP and GM of Analog Foundry Business unit, Dongbu HiTek, Korea;
* N. Ramakrishnan, president and CEO, Mandate Chips & Circuits Pvt Ltd;
* D. Rajakumar, GM, Third Millennium Test Solutions (3MTS);
* Ganapathy Subramaniam, president and CEO, Cosmic Circuits Pvt Ltd; and
* Arnob Roy, president-engineering, Tejas Networks.

Indian electronics product industry provides biggest opportunity for semicon
According to Tejas Networks’ Arnob Roy, product companies addressing a large local market have the potential to trigger an ecosystem. He added that the Indian electronics products industry is the biggest opportunity for Indian semiconductor industry.

Presenting an overview of the Indian electronics product market, which stands at $45 billion today, inclusive of $18-20 billion in telecom, $20 billion in consumer, industrial, automotive, etc., actually presented a great opportunity for the semiconductor industry. The Indian electronics product market represents close to 10 percent of the global electronics products market, which has been growing at approximately 22 percent year-on-year compared to 3-4 percent globally.

The Indian electronics product market is likely to grow to $120 billion by 2015. Roy added that domestic products for this market can be the biggest trigger for the semiconductor ecosystem. India consumes semiconductors worth $8 billion today, which would grow to $30 billion by 2015.

India has all the key ingredients — such as a large, growing domestic industry, a large talent pool of technical and managerial resources, and tremendous leverage of “cost of innovation”. However, the Indian market has its own innovation needs. Domestic systems companies need to drive the innovation requirements for the semiconductor market.

The Indian electronics industry can contribute significantly to the GDP as well and reduce the trade deficit. Its contribution today is negligible, as compared to the USA – 40 percent, Israel – 22 percent, and Korea and China – 15 percent, respectively.

Roy said that there is a need to nurture the Indian industry to meet domestic and strategic needs. There is also a need to create a ‘market pull’ for “made in India” products. In this regard, it would be wise to adopt a similar approach as China, while it was creating companies such as Huawei, ZTE, Haeir, etc. There is also the need to make available risk capital, and develop skills in product conceptualization, product management, marketing, branding, etc.

Dongbu HiTek’s Lou Hutter stated, “We believe in the Indian industry and we would like to be part of and help drive growth.” He added that Dongbu HiTek has been visiting India with the goal to establish something here! This is the first clear sign of a global foundry having shown keen interest to be a major player in India, which is excellent news!!

He pointed out that the global analog/power market has been growing at a CAGR of 2x times the semiconductor market While India has advantages such as a world-class education system, vibrant emerging market and proven engineering strengths, it also needs to address major challenges such as trying to build up market presence, lack of or presence of few ‘Indian’ global brands, developing marketing and business knowledge, and have access to manufacturing.

On the subject of how Dongbu HiTek can help the progression of the Indian semiconductor industry, he said that the company works with IDMs, engineering services companies, fabless and systems companies, and it could do the same in India. “Collaboration is really the essence in an ecosystem,” he added.

D. Rajakumar from Third Millennium Test Solutions noted that while the test market has been moving up, the Indian market has been coming up as well, although growth has been slow. Touching upon the ecosystem, he said that there was a need for design and test groups within companies to work side by side. In this regard, 3MTS can help develop or evolve a more complete collaborative ecosystem.

India needs more OEMs/ODMs
Cosmic Circuits’ Ganapathy Subramaniam pointed out that India lacked the presence of companies having revenues in excess of $10 million. “We need to have several such companies. We also need more OEMs/ODMs.”

He projected the electronics industry to touch $36 billion by 2015, but added that there were few or no Indian companies that could take the benefit of this market as yet! Even the lack of IP companies or the lack of fab/foundry were not India’s current pain points.

He highlighted certain gaps in the Indian ecosystem. These are:
* OEMs and ODMs developing products for India and working with fabless/IDM companies in India.
* Serious efforts needed at the level of the ISA to put a fabless policy in place.
* Need for a centralized lab for reliability, FIB and for FMEA purposes.

He advised the Indian industry to take advantage of the Karnataka state government’s semiconductor policy. He concluded that there was a need to view design as a value add, contrary to the current situation.

N. Ramakrishnan of Mandate Chips & Circuits Pvt Ltd stressed on the need to collaborate for semiconductor product development. “There is a need to understand what customers want, and then give them what they want,” he added. “You also need to look at the complete product lifecycle. Unless you have the customer in mind, people do not pay attention to the aspect of the product lifecycle.” He highlighted the need to maintain the sanctity of the value chain.

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